We recently compiled a list of the 10 Best Space Stocks To Buy According To Analysts.In this article, we are going to take a look at where HEICO Corporation (NYSE:HEI) stands against the other space stocks. We also dive deep into American dominance in space technology.
Space exploration continues to be a key area of research for scientists. In recent decades, it has attracted interest from security experts globally, given the wide use of satellites for peaceful military purposes, such as navigation, intelligence gathering, and military communications.
Both the United States and the Soviet Union had come close during the Cold War to developing satellites that were capable of striking targets on the surface of Earth. However, all efforts were put to a halt with the 1967 Outer Space Treaty that bans countries from non-peaceful activities in space, including stationing weapons of mass destruction.
The United States continues to dominate space, with the most number of active satellites and the largest space budget. Home-based aerospace companies have played a key role in ensuring this strength. Space Based-Infrared System, or SBIRS, which is one of the United States Space Force’s high priority programs, has further enhanced the country’s space power with capabilities to detect missile launches and provide early warning.
Several pure-play space stocks have surged following Trump’s victory in the November 2024 presidential elections, driven by what analysts are describing as the ‘Trump-Elon trade’. While talking to CNBC, Andrew Chanin, the CEO of ProcureAM, LLC, which runs an ETF with exposure to space stocks, believes the Trump-Elon partnership will prove to be a significant driving force for the industry.
"I don’t think anyone can underplay the potential catalyst that I don’t think many people were talking about before: the most important human in the history of the space industry having the ear of the president-elect, who in his past term found space important enough to create a separate branch of the military."
Strong financial results during the third quarter of 2024 have also partly led the stock rally. Cantor Fitzgerald analyst, Andres Sheppard, has said there is a broader sentiment driving the stocks, such as demand for national security and ongoing work on key space projects.
"We’re seeing a big increase in investor inbounds. We’re getting calls and emails from institutional investors, which are finally starting to realize that this market is only going to continue to accelerate. It’s only going to continue to proliferate because of national security, because of the Artemis program to get the U.S. astronauts back on the moon, because of Elon’s ambitious goals of getting to Mars."
Sheppard also stated that space stocks are benefitting from SpaceX being privately held, as investors look toward other companies in the industry to enhance their exposure to the space sector.
Methodology
We sifted through ETFs with exposure to the space sector and our previous articles on the industry to get a pool of space stocks. From there, we picked 10 stocks with the highest average share price upside potential and ranked them in ascending order of the metric.
We have only considered stocks that had at least three analyst ratings. All data is as of January 16, 2025. For perspective, we have also shared the hedge fund sentiment toward each stock, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Heico Corp (HEI) Among Warren Buffett’s New Stock Picks?
A fighter jet in formation, revealing the prowess of the companies defense arm.
HEICO Corporation (NYSE:HEI)
Average Share Price Upside Potential as of January 16: 17.70%
Number of Hedge Fund Holders: 57
HEICO Corporation (NYSE:HEI) is an American aerospace and technology company that specializes in manufacturing jet engines and aircraft component parts. It operates in two segments: Flight Support Group and Electronic Technologies Group. Space and other defense-related subcomponents are among the most significant markets for HEICO’s Electronic Technologies Group. These are widely used in satellites, aircraft, and unmanned aerial vehicles.
HEICO Corporation (NYSE:HEI)’s two subsidiaries, 3D PLUS and Exxelia, are credited for supplying critical mission components for India’s Chandrayaan-3 spacecraft, which landed on the Moon in 2023. They designed and produced EEPROM and SDRAM modules, EMI Filters, ESA space-qualified Tantalum Capacitors, and other inductors that were used by Chandrayaan-3.
On December 17, the company reported strong results for the fourth quarter of fiscal 2024, with net income increasing 35% from last year to reach a record $139.7 million. For the full year 2024, net income stood at a record $514.1 million, or $3.67 per diluted share, growing 27% year-over-year. HEICO Corporation (NYSE:HEI)’s board of directors also declared a semiannual cash dividend of $0.11 cents, to be paid in January 2025, marking the 93rd successive semiannual cash dividend since 1979.
For 2025, the company has forecast net sales growth across both business segments in anticipation of sustained demand for a majority of its products. HEICO Corporation (NYSE:HEI) is one of the best space stocks to buy according to analysts, with a consensus Buy rating, and an average share price upside potential of 17.70%.
Hedge fund sentiment around the stock continues to improve as well. According to Insider Monkey’s database for Q3 2024, 57 hedge funds had investments in the company, up from 53 at the end of Q2. In November, Warren Buffett made a significant shift toward aerospace stocks with Berkshire Hathaway investing $185 million in HEICO Corporation (NYSE:HEI).
Overall HEI ranks 7th on our list of the best space stocks to buy according to analysts. While we acknowledge the potential of HEI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HEI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
